West Bengal government departments have been asked to slash non-plan expenditure by 10 per cent in a bid to head off the financial crisis looming over the state.

The latest cost-cutting measures follow the announcement of a 1 per cent hike in VAT on luxury goods on November 12 to enable the state exchequer to mobilise additional resources.

A notification issued by the Finance Department today said, "With a view to containing non-plan expenditure, it has been decided by the state government that for the year 2010- 11, every department shall effect a 10 per cent cut in non- plan expenditure, except on salary, pension, medicines and diet."

Departmental secretaries have been asked to review the situation on a regular basis.Announcing the hike in VAT on luxury household items from 12.5 per cent to 13.5 per cent on November 12, State Finance Minister Asim Dasgupta had said all was not well with the fiscal health of the state.

He claimed that by increasing VAT and cutting non-plan expenditure by 10 per cent, the state would be able to overcome the crisis in the next four months.

Blaming the Centre entirely for the financial problems of the state, Dasgupta said that on account of the non-receipt of central funds exceeding Rs 7,000 crore, to which the state government was entitled to, there was no alternative but to take the decision to slash non-plan expenditure by government departments.